we get the latest u.s. jobs data. we set for the -- will august overshoot or undershoot and return for a seventh straight year? the message for the u.k. government. energy. why the latest inflation data may serve to strengthen mario draghi's caution at next week's ecb meeting. this is bloomberg "surveillance ." some manufacturing data crossing

the terminal. 57.4. withigure bang in line earlier estimates. a strong figure if you look at the pmi manufacturing figure five yearsst four or or so, that is equal to the high of a couple of months ago. so, manufacturing going from strength to strength. 57.4, the actual figure 57.4. sets us up nicely for the ecb meeting on thursday, backing some view that the economy is strong enough to weather the beginning of the normalization of of ecb policy. check out what is happening with european equity markets. we are on track for a weekly gain. we've been alternating on a weekly basis for the lesast six. infell for a third month august. worst losing run since february

2016. the u.s. jobs report. the euro is down against the dollar today. after rising for six out of the last eight weeks. be question will be -- we'll asking our first guest of the hour is has the dollar's fortune changed? to. 10-year yields, fell 2.11%, lowest since november. .est month for the u.s. 10-year talking about falling yields in august. is the bond market telling us the u.s. economy is in good enough shape to warrant another hike in interest rates this year? the fed meets in september as does the ecb as does the boe. %.ude oil is down 1%, just 2.8 yesterday it is down 2% this week. tropical storm harvey is crimp ing crude processing. the flipside is gasoline futures

have risen this week. let's get to first word news. sebastian: president trump is considered attaching an increase in the u.s. debt limit to a funding request for hurricane harvey. $5.5 million will go to fema 95 going to the small business of ministration. to small business administration. theresa may is coming under pressure after the latest round of talks ended in a stalemate. union's negotiator says that britain is refusing to fill its obligation. the london mayor says that the government needs to get its act together. >> i think the prime minister in the cabinet have got to raise their game. i've been saying for a while to make suregot

they negotiate in good terms in positivity with the e.u. >> in china, there is more evidence the economy may remain robust enough to continue coming financial risks. manufacturing top estimates, the third consecutive month of expansion. 1% afteran peso fell the economy minister says the nation needs to prepare an alternative to the north american free trade agreement. talkscond round of nafta resumes in mexico city with president trump's rhetoric expected to figure prominently. he threatened to pull out of the deal four times. global news 24 hours a day powered by 2700 journalists in 120 countries. this is bloomberg. mark: thanks. we get the latest reading on the u.s. employment market later today. analysts expect 180,000 jobs to be have been added in august. the trend this year is for

numbers to come and higher than expectations with the nonfarm payroll topping forecasted 5-7 months. august has undershot expectations for the last six years. investors will also be scouring the report for any clues on how it might influence the fed's thinking on the rate path. at's bring out fx researcher credit agricole. is average hourly earnings your key focus? >> good morning. yes, indeed. that will be part of the payroll support. indeed, investors will want to know will there finally be improving market conditions? we had a lot of discussion in recent weeks about how the phillips curve is working in the was of the u.s., how that

released just before jackson hole arguing that we should not be using the phillips curve anymore. with all of that focus, i think the average hourly earnings growth will attract - have greater importance this time around, especially if we do see some evidence for that growth accelerating. mark: if we see a pick up in hourly earnings, might it peril -- the dollar sentiment is turning. we saw the low, lowest since january 2015. bit of a bounce this week. are we witnessing a turn? >> it is a game changer and a whole debate about the phillips curve. i mean, i'm not saying -- it will certainly alleviate concerns at the fed that, despite the accommodations and the tightening and improving labor market conditions that wage inflation remains elusive. if that comes and then we hear

from deadly next week that that was a welcome change in the overall picture, you could easily imagine investors -- rate fed. by the for the moment, we are pricing 40%. mark: by december, 33.8%. wellt the -- it is still below the 50% mark. the point being the markets are still quite skeptical the fed can deliver on the dot plot. from that point of view, saying that, indeed, that the payroll today could indeed help the dollar regained more ground across the board. mark: the fed meeting in september. balance sheet reduction. >> i guess the market message on that is fairly mixed. the dollar is coming from a stretch of weak performance or underperformance. treasury yields are testing the lows. it does not seem like the market is expecting any change yet.

however, i still think that, given how the ducks are lining up, political risk debating around the debt ceiling and at the same time hopefully wage growth accelerating, you think the fed may muster the courage to go ahead. mark: what is the market telling us with yields -- it's difficultnt, to reappear yes, yields are very low. behind that may be an interesting flow story developing over the summer. the accelerating global growth on the back of improving trading curve conditions -- are filing big exporting nations like china. it is all these trade dollars having to go somewhere. the reserves are invested into the treasury market. this much may be explaining why treasury yields are so low, despite being on the verge of the fed announcing the unwind of their balance sheet. from that point if you, i would not be finding any comfort in

the fact that yields are so low. ultimately, we could have that decision as soon as september. the ultimate course of treasury yields is on the outside, supportive of the dollar. mark: head of g-10 fx research at credit agricole. stay with "surveillance. of london says theresa may and her cabinet need to get their act together as the latest rounds of brexit negotiations end in acrimony. plus, the latest data shows eurozone inflation is being driven almost entirely by energy. where does that leave draghi as they head towards their next policy decision on thursday? what a week we have got next week. this is bloomberg. ♪

mark: let's get back to bloomberg business flash. against theoing grain and raising its fees by 5% per $100. the move which comes into effect next month will bring the cost for institutional cost shares to 50% per $100. has reported second-quarter sales that beat analyst estimates. as2.77 billion euros continue growth at universal music offset pressure on its pay tv unit. parting ways with the head of -- after the company's initial round of programs failed to catch on with audiences. spotify says it will now focus around its popular playing list

and other features. that's the bloomberg business flash. mark: so, prime minister theresa may is under pressure after the latest brexit talks end in stalemate in a money. the e.u. negotiator says britain is refusing to acknowledge his financial obligation. the u.k.'s crescent secretary urged the-- brexit secretary urged the e.u. to be more flexible. he prime minister and her cabinet have got to raise her game. members ofily with the british cabinet. i have been saying for a while they have got to make sure you negotiate in good terms with a sense of positivity with the e.u. mark: the hard of -- the head of g-10 research at credit agricole. summing up the month of august, this is pound top an--

pound-dollar. worst month since october. the pound index had its worst month. how much more bad news is there out there? >> my view is that a lot of negatives are already in the price. so, projecting further, sterling underperforming against the dollar, against the euro has to assume something close to a disaster. the eventual outcome of the brexit -- mark: you can't be encouraged by the talks, the lack of progress. >> the extent in which the two parties are trying to talk their position as they have to reach a point where they have to make a decision and a decision will be made. that is my into rotation of what is happening. by now it's clear that the ak. will be -- the budget as bargaining chip in exchange for a new relationship with the e.u.

down the road. it is uncertain to how the e.u. will use that as a bargaining chip down the road. following the german elections, now i think there will be more clarity on both the positions of both. i'm not that really concerned about what has been happening. it's not helping the pound. but want i want to warn against is that time and time again people talk about pure sterling parity. it is the case that the fx market, being the most liquid of all, they tend to overshoot. mark: you don't think it will overshoot to parity, do you? >> to justify a move to parity, you have to -- have a severe supply shock to the u.k. economy. it has to assume a balance of payment crisis. these are not my sometimes. i can't subscribed to that view. it is the highest you can get. on the base of those assumptions

could be 95. theoint again being that fundamentals are much more slowly moving than the fx markets. so, at some point, fx markets push to unreasonable levels. and they have to wait for the fundamentals to justify those moves. we may be reaching the point where some. justification may be needed make of theid you comments that said the brexit risk do not justify this record low interest rate. he is one of the two who's voting to change rates. do you see any big shift within the boe, given the continuing weakness of the economy? saunders has been relatively hawkish, relative to the view of his colleagues. so far, there is little to indicate that the hawkish minority at the mpc will be growing anytime soon.

there is still time to november or february next year. unless the data deteriorates significantly further, the boe will be on to renew pressure to remove at least some of that, monetary easing -- in the immediate aftermath of the e.u. referendum vote. andfrom what i can tell looking of business confidence indicators, investment intentions, hiring, y es, they are not painting a very rosy picture. at the same time, this is still an economy of full employment and potentially peaking inflation at some point which supports the real purchasing power of the uk's consumers. side with would -- michael saunders on that. i think the boe may indeed be in position to hike rates before long. hikes dismissive of any anytime soon.

clearly the pound will be playing a role in that. my point being as an investor i continue to see potential rate hike from the boe as a way -- mark: carney in october when the pound index was at these levels said we are not overlooking the weakness of the exchange rate. might we get similar comments soon? >> if it continues. it is the case that what we have been seeing for the last 10 years in the markets, there is the market for the central banks. the case being if a central bank makes, take a certain view on the economy, the markets like to challenge and push it to a point where they have to deliver. we like to call this calling the bluff of the central banker. carney wast that saying that they may hike rates, encourage the markets to call the bluff and say, we will sell the pond until you do so. in the extreme world, you think the markets may be driving the

central bank's decision. it's reached the point that if the pound continues to selloff, that may indeed -- force the bo e's hand. that is one tool they have to defend the currency. mark: staying with us. from credit agricole. draghi and the edata. the latest eurozone inflation figures show energy prices the driving price gain. will that prompt more caution as the ecb meets. this is bloomberg. ♪

mark: you are watching bloomberg "surveillance." the ecb's latest policy decision thursday. mario draghi yet another piece of evidence that advocates caution when officials discuss their plans. inflation data yesterday showing only energy has affected the driving price gains, accelerating growth. as it beat forecasts, the trend is far from entrenched. this is a great shot. 47.15. which shows the output gap. which has narrowed. but this is super core inflation and it includes the categories of prices that relate to the amount of capacity in the economy. as we can see there, it is showing few signs of life. is the big issue right now? >> it is the issue. because if you want to taper q.e. to arrestntroduced

the inflation expectations. if you now want to remove that, you have to make sure that the outlook for inflation is not deteriorating. so, it would help the ecb if core inflation what is improving, because it adds credibility. the problem is there is not evidence of that happening anytime. the problem is even greater if you consider other economies like the u.k. and the u.s. which are at full employment,capacity. and yet, core inflation cannot go higher. right? the problem for draghi is pretty certificate. -- pretty significant. mark: what worst as he used to appease all parties? >> i think he will manage, be fairly successful if he does deliver on the. but a couple of things. one is, given the price action

any fx markets, i believe that eurozone projection inflation's will be revised down. i think draghi will be make sure to blame it on the euro, because that what is driving the inflation projections lower. that could ultimately translate into more aggressive jawboning thatn we're used to seein ghim doing. the other component will be the vaguensness about q.e. tape. draghi may indicate that the ecb has been deliberating beyond here end and could reiterate his comments from sintra that now that the economy is improving it may need less stimulus them before. he fall well short of indicating that taper is coming. he will try to delay any indications of any concrete details until later in the year. from that point of view, if that

is what you get and you have been buying euros like there is no tomorrow for the last three months or so, you may want to be cautious on that position. i think that net result, going into the ecb meeting would be some unwinding -- mark: buy the euro. >> ultimately, if you look at the bigger picture. the messages we have no choice. they have to taper q.e. this much is a positive for the euro. g-10 research at credit agricole. the latest brexit talks ended in stalemate. we are going to talk to a former negotiator in europe. this is bloomberg. ♪

mark: welcome to our weekly brexit show. i'm mark barton. let's get around above the weeks big brexit news. sebastian: brexit talks resume

this week with the european unions chief negotiator accusing the u.k. of not being serious about his withdrawal from the bloc. >> to be honest, i'm concerned, time passes quickly. i welcome the u.k. governments paper and we have read them very carefully, very carefully. but we need u.k. positions on it'separation issues, necessary to make progress. sebastian: the flurry of position papers came under fire from brussels. the european commission president accused the u.k. of not being prepared for the meeting. read all the position papers produced by her majesty's government and none of them is satisfactory. there is still an a numerous

amount of issues that remain to be settled. theresa may arrived in japan on wednesday as she starts a three-day visit. prime minister abe said he was encouraged by pledges from the u.k. leader after he pressed for a predictable british break away from the e.u. to reassure japanese investors. global news 24 hours a day powered by 2700 journalists in 120 countries. this is bloomberg. mark? mark: let's get some breaking data out of the u.k. pmi manufacturing is spending at the strongest pace in four months in august, lifted by export orders and domestic demand. a measure of factory output rising just -- to 56.9 from a revised 55.3 in july according to ihs. the market exceeds the 55 forecast by economists in a bloomberg survey. companies reporting the strongest intake of new order since may bolstered by the weak sterling.

the currency depreciation also contribute to purchase price gains accelerating for the first time in seven months. at a slower pace that's seen at the start of last year's referendum. sparking the plunge in the currency. making it more competitive as well is driving up the cost of imported goods. overall, economic growth is slowing the first half as consumer spending stalls. some boe policymakers are calling for a rate increase to keep the lied on above target inflation. u.k. manufacturing accelerated to a four-month high. we are getting a little bit of a push upwards in sterling. 1.2931 against the dollar. brexit negotiations have ended without sufficient progress being made according to the e.u. negotiator during a combative press conference alongside his u.k. counterpart david davis. the stumbling block is over

money. barney's team wants an agreement on how much been will pay towards its commitment to the e.u. the u.k. wants to move on to talking about future trade deals before revealing its hand. >> let's continue to work together constructively for the people above process. as discussions in june, july begin -- our separation from the european union and our future relationship is inextricably linked. we can only result some of these issues with eye on how this new partnership will work in the future. it is not about skipping ahead or trying to reopen previous discussions. it's about pragmatically driving the process we all want to see. mark: a former negotiated for the u.k. in the e.u. he joins me from brussels. thanks for joining us today. are you surprised that the talks made little progress this week? >> i'm not hugely surprised. i am very surprised and

astonished that the u.k. seems to have moved backwards away from some acknowledgment that it will have financial obligations after the brexit. mark: how is this going to be resolved, the bill issue because the e.u. says the u.k. has no obligation after brexit comes into force in march, 2019. the u.k. it seems want to tie it to the transition deal. you have a transition deal, you keep spending into the e.u. and that sort of ties into that. ink there will be some sort of resolution, possibly is closest the october 19 summit? steven: i don't think it looks particular good for it at the moment. i think there has to be movement. it's really important to understand a little bit about the e.u. budget system to for each year you have a set of commitments which is what it e.u. commits to in that year. and a set of payments.

and like many situations, commitments is made in one year and the payments related to that commitment are made over subsequent years. normally three years but sometimes a little bit longer. now, the point is that if you saying that the last payment into the e.u. budget will be the last liability that the u.k. accepts, you're saying that things are committed to a 2018 and even some from 2016, you're u.k. is notthe going to accept it is liable for the payments that are made on those projects that it agreed to well as a member. i think that is a very basic thing. other financial issues, for example, about whether it has to own commitments that it makes after brexit until the end of this micro financial framework, i think they can be negotiated. they'll be open to negotiations. without this key acceptance that the u.k. has to pay its credit card bill even after its

torn up that its contract with the credit card company. without that, it is difficult to see the possibility of any movement. mark: some are suggesting this might be a cunning plan of british negotiators who are stud refusing to reveal their positions. do you believe any of that? steven: no, if it is a cunninng gn plan, it is a very well hidden lan. i think some people in the u.k. government seem to be living in d acting asy world an if brexit has been forced upon the u.k. by the european union as barnier said yesterday paid this was the u.k.'s choice. the u.k. new there would be consequences. people who watch this area new there would be consequences, including the financial settlement. at a certain point, i think the

u.k. has to decide whether it actually wants a deal or whether it wants somebody to blame for there being a bad deal. if it is looking for somebody to blame for domestic consumption, it seems to be going about it the right way. lots of the u.k. press seem to be taking that line. if it is looking for a deal, i think it needs to, to move significantly. mark: some are also saying october 19, the e.u summit is a big day, because maybe theresa may has more latitude to address the bill issue then negotiators do. is it possible that she could come up with some sort of grand plan where the future payments are tied to the transition and access to the single market, and thereby, she opens the door to discussing the future trade arrangements with the e.u.? or do you think that is asking for too much in october?

steven: i don't rule that out. i think it looks pretty unlikely to me. i mean, i think the point of, during a the u.k. -- transition deal, what is actually doing is making commitments during that transition deal that will then be paid in subsequent years after the year in which was made. so, it is not as if if there is a transition deal it could be bundled into that. now, ik might be good for the u.k to attempt to make it look like that is what is going on to what it into a single bundle and make it more palatable to the conservative party. but they are in a difficult position, because it seems a lot of people within the government and a lot of people within the conservative party will be unhappy of any bill at all. and she really has to get tougher. mark: is there truth in the accusation made by the u.k. side earlier this week the e.u. is

showing a lack of flexibility? i think there is certain lack of flexibility on the most basic, it's. -- basic elements. i think it is reasonable on basic elements like this. on certain aspects of the financial deal, for example, what happens what happens to new commitments made by the e.u. between brexit day and the end of this macro financial framework, which the u.k. did commit to an 2013 -- a huge victory for david cameron at the time. i think there is latitude for negotiation on that. on the basic printable that things committed to need to be paid for, there's no real reason to be flexible. also, there's flexibility built in. this idea of sufficient progress is a pretty fvague term. that could be interpreted in lots of ways. there's political letter to build into the. mark: thanks a lot.

steven bullock former negotiator for the u.k.. london weighs in on brexit negotiation as he tells theresa may to raise her game. this is bloomberg. ♪

mark: welcome to our weekly brexit show live fomr london. -- from monday. raise your game, that is the message fropm the mayor of london is the latest round of talks with end with little progress being made. khan told bloomberg the negotiators should keep their eyes open. however, he said it is in

nobody's interests for there to be a bad deal. mayor khan: one of the things i have been lobbying the government about is more certainty. one of the things, it's not realistic is for us to conclude deals with the e.u. by march 2019. i'm pleased the government is listing. that means hopefully banks will now know there is not going to be a cliff hedge fall in march, 2019. they should be reassured the r transitionalfo relationships. i think the government should say sooner rather than later. that means continued membership in a single market at least during the transitional arrangements. e.u. should be members of the single market. -- the negotiations carry-on and the government recognizes why the single market is so important, banks and others will have the certainty to know that in march, 2019, there is no need to make plan b's for if and wehn

we -- when we leave the single market >> negotiations him to be stumbling to it is this not a key concern for you? mayor khan: i meet directly with britishers of the cabinet. i've been saying for a while that they need to make sure the negotiate in good terms with a sense of positivity with the e.u. but recognizing there is a lot of advance work that takes place before negotiations. david davis and his team appear to be raising their game. , you have is -- look got to recognize if you in the shoes of the e.u. it is not possible that somebody leaves the e.u. should have better terms than those inside the e.u. club. also recognize there is a good deal to be done. i think, for example, we should as soon as possible give a signed guarantee to the e.u. citizens in the u.k., irrespective of what the e.u. says, we will give you the

guarantee you want. that will lead to a good will with our european partners. look, it is in nobody's interested get a bad deal. it isbad for the u.k. and bad for the e.u. mark: up next we speak to the secretary-general of the oecd. this is bloomberg. ♪

jonathan: this is bloomberg real yield. leverage has been building up

over the last year or so. >> yesk w, broadly yields are at multiyear lows. >> even the way the fed defines it, they're somewhat behind the curve. mark: breaking news from kenya. the kenya court has nullified the recent election results. and it's ordered a new vote. nullifying the kenyatta's election result. this is a big developing coming out of kenya. yse opposition national -- sa members of the ruling jubilee party hacked the computer system to insured president kenyatta won a second term. his legal team rejecting the accusation, but the latest about is this. the kenyan court has ordered a

new election. the court has nullified the vote ordered aed a new -- new election. we will keep on top of this developing story out of kenya. government ministers are gathering in italy. joining us now from the event is the oecd secretary-general angel gurria. mr. gurria, thank you sir, for joining us today. if you do not mind me starting on brexit as this is our brexit show, how troubled are you by the lack of progress being made between the e.u. and the u.k. in negotiations? secretary gen. gurria: it was somewhat predictable that in the first round there would be many more questions than answers. the question is also about the focus on the priority of the issues.

first you put a whole lot on the table. ing then they've been pick and choosing some issues. and one side, the u.k., trying to put their own priority concerns. to bes the e.u. trying much more global and saying, ok, let's talk first about they call divorce. then look at the other details. it is more about process. it is more about who blinks first in a way. the next rounds we will get into the substance. the whole thing is quite unfortunate. i was campaigning strongly against brexit, but now that it has happened, the question is how do we make it as smooth and as seamless as possible so that it will be the least destructive possible. and we can just move on. mark: we have had belgium's

prime minister joining malta's prime minister in saying brexit might not even happen. do you agree? well,tary gen. gurria: frankly, this is up to the british people. both mr. very much the prime minister of malta, but that the british people are the ones, who in the light of more information, better information, updated information about the implications who are going to eventually have to take the decision. what is true, and this most unfortunate, is that 60% of the youth of the u.k. whose future was at stake in the brexit votge did -- vote did not vote. of course, they may be regretting it now, but it also shows that first of all, suggesting the question of the brexit referendum perhaps was not a brilliant idea.

second, and calling for one was not a brilliant idea. then the execution, the campaign, it looks like we were choosing the prom queen rather than running one of the most important, and one of the most consequential decisions that we had to make. there was not enough information. there was not enough mapping of how each of the constituencies was going to vote. where the visit should be. the andainly -- where position be. the two issues, one about migration and the other about regulations, that well, made it looks like it was to some people made it look like it may be convenient to leave the european union were mischaracterized. and unfortunately, that led to a bad result. mark: let's talk about the global economy. are you more optimistic about the general state of the global economy than say you were a year ago? secretary gen. gurria: yes.

it's a better outlook, but not yet good enough. we don't know if it is sustainable. there are a number of downside risks. the discussion at lake cuomo is prisely out some of the risks facing us. and the other question is, for example, we are celebrating that we are going back to 3.6% growth next year. than that is still less the 4% average growth that we had pre-crisis. that is, we are 10 years into the crisis and we are still growing at a lower ratge tha -- rate than we were. before the crisis so, that just gives you an idea of the legacies of the crisis. slow growth, very high

unemployment numbers in many of the country still. and growing inequalities. and then, because of all of these three, the question of the collapse of trust, which is just, just dogging us, which is affecting us and which is producing things like the brexit the or the renzi vote, referendum or even the loss of the referendum for peace in co lombia. then some unexpected outcomes in some national elections. mark: or even the election of donald trump in the united states, one of your chief concerns in june were protectionist policies and donald trump, has been a proponent of mnore nationalistic rhetoric. can we move on to donald trump? are you losing confidence in mr. trump's ability to push through his key economic agenda?

thinkary gen. gurria: i what you are seeing now is, because of the complexities of, you know, reality both political as well as economic as well as with the formation of all of these global value chains over time, etc., that the campaign rhetoric, of course, becomes more complex when it comes to actual governance and the question of legislation, which is even more complex. is what is important here that once these realities are recognized as such, that there be sufficient flexibility in order to roll with the punches, if you will. and adapt to this reality in order to make the most out of both the opportunities of a, still incipient recovery, but it think time to strengthen it and to move it forward rather than

by insisting necessarily on the same premises that led to the campaign result but that may not be today as appropriate when it comes to know, taking executive decisions and even less so legislative decisions. mark: thank you, sir, for joining us today. d'se angel gurria, the oec secretary general. bloomberg "surveillance" continues. guy johnson is in london and tom keene is out of new york. they will talk to the former italian prime minister, mario monti. this is bloomberg. ♪

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is an inflexible debate over brexit flexibility. the debate reengage is the prime minister returns from japan. day, and -- the president asked for the first billions of aid dollars, food and water are scarce. this is "bloomberg surveillance." i am tom keene in the euro. guy johnson is in london. help me with flexibility, the new debate on brexit. what is new in september on brexit? guy: the pace probably needs to pick up. the clock is ticking. some would probably argue the eu is hiding behind its collegiate approach, we don't have the ability to change. are they hiding behind that?

is the u.k. missing the point? it is amazing how september has come so quickly. first word news, here is taylor riggs. taylor: in texas, the death toll has risen to 39 from tropical storm harvey. they say floodwaters are expected to be gone from most of houston by early tomorrow. firefighters still monitoring a chemical plant after an explosion and fire. authorities warn there could be more explosions. president trump may use the disaster in texas to lower the risk of an unprecedented default. the president may attach an increase in the debt limit to the first $6 billion in disaster aid request. congress house wants to extend the debt limit until funding for the next year.

the third round of talks for brexit has ended in acrimony. >> i think the prime minister and her cabinet have got to raise their game. i have been saying for a while they have to make sure they negotiate in good terms with the eu. taylor: the sticking point is money. the eu says britain should pay for money the block made assumptions that it would remain a member. the kenyan court upheld the opposition complete that the winner of last month's election won by rigging. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. data.hsiis is the

a little bit of curve flattening, under 80 basis points in the last 48 hours. pre-jobs day churn. oil has been interesting and separate from nat gas and ga soline. the vix showing good equity again, thet crude european global crisis. -- price. let's talk about what is going on in the european equity space. we are trading around 0.4%. of canadaong data out yesterday. are we pricing and not enough in terms of a hike coming out of canada? seeing spread tightening.

there was commentary yesterday that the ecb is going to be slower in rolling off its qe program. the other one is the kenyan shilling. keseur. a first for "bloomberg surveillance." all of our european audience, i apologize, i have never gone leaders and gasoline. this is a very american chart. i was in a bar in l.a. the first time i saw four dollars a gallon. this was 2008. that was very expensive gasoline. there was a three-year period it was still elevated. this is where john tucker of bloomberg radio turned in the homer. -- hummer.

here we are with a little leg up. this is a big deal, $2.45 a gallon on aaa unleaded. it is breaking out of the top range. the wall street journal showing gasoline is up 6% in the last few days. guy: we need to be thinking about what we will be doing with our money. what we're learning over the last week is money is flowing out of europe. it started as a trickle. now it is getting higher. this is a string of losses for the german dax. screen on myi bloomberg if you were a euro 5% this, you made year. if you are an american investor, you made 20%.

very good. we will have all that data across our platforms at 8:30 this morning. onlondon, a september update american politics from london. help me with the allies. it is a new month. the allies have their own challenges as well. what is the relationship with the president and prime minister may? >> certainly the president has been dogged by issues at home. that does not necessarily help his posture abroad when he looks we get home. -- weak at home. that is an issue going forward. we are about to see congress coming back which will renew scrutiny of trump's ties to russia. allies, there is obviously

the special relationship with the u.k., but really trump's attention has been elsewhere in the last couple of weeks. tom: do you assume a visit by the president to the united kingdom in autumn? >> i think it is possible. they have been talking about potential visit since he was elected. theresa may came to washington in the opening weeks of his administration. we could definitely see trump heading to london. i think he will be looking for opportunities to look presidential, to change the narrative from the renewed russian investigation as those get back into the news. i will not be surprised to see that. how much of a discount has been applied to the markets as a result of the upcoming debt ceiling story? if trump can tie the texas aid risk, howd lessen the

much can i take out of that? >> > i don't know that there has been that much of a discount, fewas we go over the last years, think about 2011 when we had this debate then and the downgrade from s&p then and the impacts it had, if we started to push back on the debt limit, would that be dollar positive? absolutely. would it reduce the level of commentary from the credit th agencies and some of the reform factions out there, would that be the dollar positive, yes it would be guy: what are the risks of doing that? >> of tying -- guy: texas and the debt ceiling together? >> we have already seen

conservative groups like the heritage foundation in the u.s. that frankly conservative lawmakers in the house pay a lot of attention to their key votes that they put out, and so they have already advised they don't want to see harvey money being offset, it is not different spending cuts. happen not likely to given that there would not be widespread support for that in congress. the issue you get with tying the debt limit to harvey is if you have political difficulties getting the harvey aid through, which seems like a possibility, all of a sudden you have the debt limit tied up with it. folks expect there will be widespread support for the rba, aid, butis -- harvey that is an assumption that could be challenged. tom: are you a genius on the

dollar? are you in the timeout chair for calling strong dollar? >> i am always a genius. no, i managed to get -- we have been bearish throughout the course of the summer on the dollar. in the summerbble and turned bearish again. where we are now, we are at some i sense the market is not quite listening to what central banks are saying. think it is listening to the ecb. i don't think it is listening to the fed fully about its concerns. i think maybe we could see a tightening. tom: there is a touch of foreign-exchange. thank you very much. today, it iser

jobs day. our conversation with liam grass. we will do that -- william gross. we will do that. coming up as well, mario monti. that is next. guy johnson will lead our conversation with the former prime minister of italy. this is bloomberg. ♪

♪ i am guy johnson in london. tom keene is in new york. angela merkel has backed emmanuel macron for pushing for deeper eurozone cooperation. childrenpe's problem are brought into play, the idea

of a wide-ranging fiscal union looks more far-fetched. there is still more movement towards it. let's get more now from mario monti, the former prime minister of italy. .ood morning, mario monti what a finance minister, the eurozone finance minister be kind to italy? mr. monti: sorry? guy: if we had a eurozone finance minister, angela merkel and mr. macron are talking about deepening the eurozone, and there is talk of a eurozone finance minister, i wonder how that would be received in italy. mr. monti: yes. italy has long been supporting monetary,f deeper

economic, and fiscal union in europe, and specifically the idea of a treasury minister from europe, which i think was aired several years ago, has always been quite popular in italy, as fiscal the notion of capacity from the eurozone. it would not be from the side of italy that any difficulties would come if that were to be the proposal put out by merkel and macron. guy: do you think the reemergence of the franco german alliance is good for italy? it seems as if they have very clear views of where they want to go, and italy is in a different place economically now. poverty has tripled over the

last three years to 8%, unemployment remains unchanged at 11%. if we compare italy and france from a real economy less of view, italy is advanced than france, and you mentioned some of the data. from a financial economy point of view, a public sector budget point of view, italy has done francerably more than over the last five years or so, france has consistently been above the 3% allowed by the growth pact. italy has gone below that ever taly is moreand i

advanced in terms of pension reform and labor market reform. think that france and germany being on the same page would benefit italy. superficially, one might say, if the two leading countries of the eurozone were to agree, italy may suffer in terms of protectionism, but if we look at it will be a, clear advantage for italy as well. james tobin.y with he was for the idea of using fiscal stimulus as a constructive tool. does europe and america need fiscal stimulus this far into the recovery?

think they need a selective fiscal stimulus. i am deeply convinced that in the u.s. and europe we lack infrastructures, traditional infrastructures, and infrastructures related to the digital economy. i think a policy of aggressively pursuing private, but also public investment in those sectors would be advantageous, both from an economic cycle point of view, but above all from a structural point of view. this is a point on which france and germany, to go back to the previous question, do not see

eye to eye. it is important that they come to a substantial agreement on that. i believe that both in the u.s. and europe there is not much need for a monetary stimulus anymore. tom: it is september, which means new things occur in the government and business world. what does europe need from prime minister may as we go into the autumn months? needs clarityope from prime minister may. i think britain needs much more than europe from prime minister may. i think it is amazing and us continentalr europeans to see how the country, which in the european

union traditionally had been the briefed when it came to any policy decisions has now become a country which is not able politically but even technique radically -- te toocratically when it comes the pursuit of brexit implementation. it is a bit of disarray and disruption. i think it will be important for both sides that britain comes quickly to greater clarity of vision. monti, former prime minister of italy, thank you very much. we will be back for a conversation with another former italian prime minister, this time in rico let-up.

this is bloomberg. ♪

♪ guy: this is "bloomberg surveillance." strong economic data out of candidate yesterday. we have a rate decision coming up next week. how big of a bind is the central bank in with the currency where is tracking towards? mid onegone kind of 30's into the mid-one 20's. -- ddollar cap go to

ollar-cad go to 110? >> that is the risk. if you look at the moves taking place over the course of this year, could you be at 110 over the next six or nine months? definitely. central banks everywhere in the world seem to be facing the same problem, they are complaining about valuations, the fed mentioning it in their last minutes, and in canada it is about the explosion and property in places like toronto and vancouver. because the underlying basket of consumer goods they follow has not spiked, they have been able to hold back. the reality is they should have been hiking in dealing with these problems earlier on. guy: it is where we are now, where they are starting from. k? they hike next wee >> i think they will hold off.

i think they will hold off because of canadian dollar strength. if you start to get to 110, that will present an issue to canadian manufacturers. i think they will let the strength of the currency do a little bit of the job for them. guy: simon derek. makely, the data as we sure we keep an eye on these markets. that is what is happening right now. european stocks are up around 0.4%. this is bloomberg. ♪

♪ tom: good morning. "bloomberg surveillance." tom keene in new york. guy johnson in london. it is jobs day. we will stay with bill gross.

later today, a conversation with someone dead center in the september news flow, gary cohn. this will be more than just the job stay interview, a conversation with jonathan ferro, really looking forward to that. let me lay out for you what we are doing today. job stay is front and center-- jobs day is front and center. michael mckee will join us. up foring at a heating the brexit discussion. ton, really front and center the september is a significant legislative agenda. in the next hour, we will feature the op-ed today by the senior senator from arizona john mccain, a most interesting op-

ed by a very ill john mccain. taylor: flood waters are receiving in the houston area. that's receding in the houston area. one out of every 10 structures flooded. the death toll has been raised to 39. in the city of beaumont, flooding chased people out of shelters. the u.s. has made its latest move in the diplomatic tit-for-tat with russia. moscow has been given for the eight hours to close its consulate in san francisco. president trump is making good on his threat to let obamacare wither. the administration is cutting the obamacare sign up

advertising budget by 93%. just in the last hour out of kenya, a decision that may reshape the country's political landscape. their supreme court has nullified the election of the president and has ordered a new vote be held in the next 60 days. the opposition candidate claimed voting results were rigged in kenyatta's favor. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. guy: thank you. qatar wants to quit the gulf cooperation council has dominated newspapers and the united arab emirates this week. this is obviously having a big

effect. are accused of supporting terrorist elements. kuwaitig to the newsagency, their amir will travel to washington to broker decision. -- ing us is good morning. thank you for your time. do we need to see regime change in delmar? >> thank you. i don't think that has been put on the table at all. what we have in this situation is that in 2015 the leader of qatar signed an agreement with the gcc to stop unnecessary

interference in the internal andirs of states in the gcc subsidiary insurrection, to stop the media campaigns that were broadcast and other articles like that. meeting andat that treaty to stop these things, he admitted that qatar is doing these things. issue is not whether or not they are in support of terrorism, but they have admitted they are in support of terrorism. to live upant qatar to the agreement that was signed in 2015. dohar woulficials in d deny that strenuously, they have denied that, and they will continue to do so.

>> look at who signed it. the agreement is there. it has been published. the signature has not been falsified. it is an official document of the gcc. sorry, your highness, so far we have been in a situation is have beentar able to withstand the pressure you have applied. it is painful, but they have a significant amount of money and are so far able to whether what is happening. ow much longer does that camp persist? are you going to be of do persuade them to shift to your position? >> i am not in a position to

give you an answer to your question. what i read in the papers and what i see from statements made by government officials is that as long as qatar does not live up to the agreement that it has signed, the situation will continue. the ball is in qatar's court. they have to perform on that and show not just trust and acce ptance of their responsibilities, that that they are willing to undertake these responsibilities. tom: good morning from new york city. i want to speak to you as the youngest son, your representation of your family and nation as ambassador to the united states, there is a generational shift in saudi arabia. what have you been counseling the younger leaders of saudi arabia?

what is your wisdom to them? >> i wish i had wisdom to share with others. i think i still feel need to be advised myself. the country is more than 70% under the age of 30 -- technicalve some difficulties. you will get that back. let's take things back up in london. one of the factors we are thinking about is what is happening with the energy story now. we watch what is happening in houston and think about what is taking place in the gulf at the moment. flowedears ago, money out of the gulf. the petrodollar was one of the

biggest factors in global markets. that has changed significantly. when we look around the world and think about how underlying flows are shifting, what are you detecting, seeing, what do you expect between now and the end of the year? >> you are absolutely right, there have been huge shifts. if you go back five years ago when the oil price was trading in the $100 a barrel. effect,arly had a major and the margins had to diversify and by alternative currencies. i think one of the interesting things this year, aside from what is happening in the gulf, is what the biggest reserve players are doing, and i am thinking china. china's reserves have grown.

you will remember going back to 2013 that there -- the planning meeting, they agreed they don't want more reserves. i think that is going to be a big shift. china is allowing their currency to flow more freely. they don't want to accumulate more fx reserves. at the margins, that has an effect on the euro, canadian. forumet's return to the in itally. thank you very much. do you think, staying with energy, that the selling of a stake in saudi aramco is a good idea? we have been hearing that there is some pushback for that concept in saudi arabia now?

do you agree with selling that stake? >> it is a matter, as you said, of policy. country's direction towards implementing vision 2030 has been clear to everybody that it is going to be implemented. the five years before 2020 have been put in place to prepare for the jump into 2030, and part of that is this sale of a percentage of aramco shares. i don't see any change in that. e any indications of a push back, if that is the word you are using. i think the government is going full ahead with that, and they have announced it will be sometime in 2018. guy: do you personally think it

is a good idea? >> i am not an economist. i read what the government has said, and they have made a very strong case for it. debatede obviously with those who are opposed to i t. i tend to believe the government is better informed than the people who are critical of it. tom: thank you so much. we are sorry for the technical challenges this morning. much more coming up. this weekend,ead bloomberg businessweek is looking good. to cover issues, one of them on hurricane harvey. on the very good primer challenges in houston. an important article on the consumer revolution going on at

unilever stay with us. it is jobs day. this is bloomberg. ♪

♪ tom: good morning. "bloomberg surveillance." it is september. jobs day, we will do that later. right now, we are going back to the biggest fight of -- where my parents argued for hours of whether i could go see dr. no, james bond. is heolest part of dr. no had a gunmetal gray ligthter.

that was cool. -- joining us on set, one of the great rebranding's in fashion today. congratulations on a huge challenge. saidwas it like when they reposition dunhill? >> it is an opportunity i cannot refuse. dunhill is an esteemed british luxury brand that will celebrate its 125th birthday. with all the place in many men's hearts. we have a great product and story to tell. that is an opportunity that will prove itself. walk in and cannot

afford it, so they just stare at it. there has always been this distance to dunhill for so many people in america. how do you cross that distance? >> i don't think we have been unapproachable. i think we need more access. one of our issues is region traffic. in america, we have limited distribution. we are going after a digital strategy this month and in the months ahead that will help us reach an audience in america faster than if we did a brick-and-mortar approach. i think our brand has been accessible in the sense of a true luxury brand. guy: this is an interesting chart. tore is talk of going parity. would you welcome parity?

>> i don't spend a lot of time thinking about currencies. we have a global trade that spans the world. without strong business in asia. we see the fall, the devaluation of the pound since brexit has had a positive impact on purchases in london. currency has gyrated, and as you know, continues to gyrate more so now in the last 24 months then we have seen in a long time. we look at the long-term view of continuing to make great products and fair pricing. guy: let's talk about making those products. you got a shop outside london, they make leather goods, isn't it? >> our manufacturing facility? guy: correct. you have that place just off market square. how may people that are employed in the process are u.k. residents? how many people employed in that

process are eu residents? >> the majority are eu residents. we have over 20 nationalities that make up our presence in the u.k. the u.k. is a third of our global employment. 10% of that is in manufacturing. we have a really diverse workplace. that is the beauty and the magic of london. guy: brexit is happening. that is going to be a problem. >> we don't know what is going to happen. we hope we have access to labor and the divorce the -- diversity and option for people to become u.k. nationals if they are not. tom: i'm going to go there now. there is a gucci effect across all of luxury. ultimate of what

we would call the button-down brand. do you need to go younger and flashier? or do you need to stay with a conservative look? do you do both? clearly.answer that we have a strong point of view on that. we are not about fashion. we are about style. that sets the tone for how we do what we do. abouthat you describe james bond in 1962 when you were debating with your parents, we forge forward with style. the millennial consumer is the most important audience for the luxury sector. afterl is squarely going a millennial consumer. in the next three years, the millennial consumers will approach close to 50% of all luxury purchases. a younger audience is absolutely essential. we're not going to go after

gucci on their play ing field. we think there is a wide-open field for us to get market share. tom: final question, what are you doing in bow ties? [laughter] >> we have an incredible netware opportunity. we have some bowties. seel long tend to ties more than bowties. tom: watch or so. guy: this is a touchy subject. tom mentioned the lighter. have you ever been associated with the back of industry? i know it is a different business. when people look at your brand and think about your brand, when you have the focus groups, does anybody talk about that anymore? >> no. when you look back on the began 125he company

years ago, they were in the harness making business. in the 1880's, thousands of people pouring into the cities, 20,000 horses dragging people around, so quality leather workmanship was high on the list of what they were doing. as the market changed, they went into automotive. carsre building things for and inventions of lights and all sorts of things for cars. begann shifted, and he pipes and went into tobacco, but he also went into clothes. cars were roaring ahead at 20 miles an hour, and he realized people needed outerwear. he started selling men's conference that were luxury -- car coats that were luxury.

we have been in the luxury apparel business for a long time. that is the business we're focused on. guy: you have clearly done a lot of studying. you for yourthank time this mine. tv , use it on your bloomberg. a great way to watch this program and sample the where's we have available on our shop. this is bloomberg. ♪

♪ guy: in case you haven't noticed, there has been a big move over the last few days, the last 13 days, and the chinese currency. it looks like something significant is happening here. i brought the chart up. talk to me about the significance of what is happening. >> we have had the strongest move against the dollar on a monthly basis since july 2005. you have had a move in the last month and half on the cny that is more volatile than dollar-yen. that tells you there is a real shift taking place.

guy: what is it, and why is it taking place? >> i think the chinese are desperate not to see their foreign exchanges growing again. they are concerned about the exposure to dollar inflows and the need to buy u.s. treasuries as a result. they saw the reserves growing, treasury holdings growing. guy: thank you. simon derrick, a quick look at the numbers. we need to take a look at what is happening with the data. there is the story. ♪

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which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver. tom: it is september and an early jobs day in america.

james sweeney on the disinflation to wage growth in 2018. it is september, and in washington, the debt ceiling shut down debate front and center. senator mccain pleads for regular order and writes a scathing op-ed on his republican president. thepresident asked for $1 billion of aid, meanwhile, food and water are scarce. this is "bloomberg surveillance ." i am tom keene. guy johnson francine lacqua. y, how will the prime minister be greeted by parliament? well, recent evidence suggests a little bit of laughter. the idea that she wants to fight election aseral

prime minister has not gone particularly well with the bank sector. i wonder if she has fired the starting gun as we approach the season. tom: that is september in the united kingdom. all distracted by the tragedy in houston. we began our first word news on harvey with taylor riggs. the death tolls, has risen to 39 from tropical storm harvey. authorities in the houston area are still searching for victims, and they think let waters are expected to be gone from most of houston virally tomorrow. meanwhile, firefighters are monitoring a chemical plant after an explosion and fire. warn therecially could be more. president trump may use the disaster to lower the risk of an unprecedented default. wants to extend

the debt limit at least until congress can fund the government through the end of the year. theresa may's third round of brexit talks have begun. >> i think the prime minister and her cabinet are going to raise their game. i have been saying for a well now they have to make sure they negotiate in good terms with positively with the eu. taylor: the big sticking point is money. the clock is made on the assumption that the country will remain a member. kenya has nullified last month's reelection of their president. judges have ordered a new election. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries.

i am taylor riggs. this is bloomberg. tom? tom: on a job stake, equities, bonds, currencies, commodities, the usual churn to the markets, yesterday, $1.1920. hydrocarbon. i will be a theme. $50.27.ude great ken prewitt, we will get to that chart in a little bit. guy: let's go to what is happening with the stoxx 600, will the canadian authorities, i.e. the central bank, decide on a rate hike next week? if so, how quickly could we see this hair move. $1.24 now. tom barrett was talking about to $1.10.n

peripheral funds little bit better over the last 24 hours. this author's story circulating that maybe the ecb will back off on changing the policy mix. we were just talking about kenya. there is the dollar kenya, we do very often, but that is the big news coming out of that country. tom: ken prewitt, my wonderful theing from years ago, first time i saw this, i was in a bar in atlanta and i looked in the window and i saw $ -- l.a., and i looked up the window and i saw $4 gasoline. this is tangible. oil, gasoline, really breaking out to a $2.45. you wonder where that will be next week. guy: let's talk about the german

markets. we have losses for the dax. germany's dax longest monthly 2016.ince february this as we start september. a lot of this is euro related. you have made 5% year-to-date, you are a dollar investor, you may nearly 20%. that is a pretty chunky number. when you think about your portfolio, made you think the dollar comes back at this point. tom: very good, guy johnson. james sweeney from credit suisse will join us in a bit. michael mckee, let me cut to the chase. which of those small, numerous items does mike mckee want to see? michael: i'm looking for the average hourly earnings, whether or not the phillips curve came alive or not. take a look at the chart that i

brought along for you, g #btv 2520, as they say. what they are looking at is job openings. openings have gone up, and we have had a very long period where earnings are just starting to break out. we hope that continues. continue,nts it to but that will determine whether or not they raise rates again this year. the headline number could be bounced around because it is august, seasonal adjustment problems. the obvious headline has disappointed. it is earnings people will care about. tom: how critical are the revisions this time around? i believe they go back to months. michael: at this point, they will not be overly imported unless they are revised significantly lower. the expectation is the economy is growing. all the data suggests that the labor market is relatively

healthy. we will not pay too much attention to the headline numbers and the jobs created unless they cause maybe 100,000. we are still in good shape. guy: why do i care about the sense of relief? we have a sense that the ecb is softening, not strengthening. in any environment raise rates when core pce is going south? technically they could, and they want to, but politically, it could be difficult to sell, so no, probably not. september is given over to the balance sheet reduction process. in november, there is no press conference, so they probably would not do it again. we will see inflation start to rise of course because hurricane harvey pushing up energy prices, so they may have an excuse by the. person not talking about harvey today because the survey week was well before the storm hit, so there will be no hurricane affect in today's numbers.

guy: that was my next question -- when will we start to see data?howing up in the michael: probably in september. there is such a length of time between the hurricane and the next survey. since the data is so widespread, i think we will have trouble getting to work, and maybe small businesses are not there anymore. we should see a significant effect for at least a month for the data for september. tom: very good come of michael mckee, thank you. we will see you at 8:30 a.m. in washington. sweeneyut james has done better on deflation. he is chief economist at credit suisse, head of their fixed income research. look of the jobs economy, and the number one thing i hear from people is ok, there is a lot of job openings, as michael mckee just set. if there are job openings, why don't they just raise wages to fix jobs?

is that broken? it is i don't think broken. 10 years ago, the nominal growth rate of the economy shifted from 5 to 4. wages would grow at 3.5%. now they are growing at 2.5%. that ratio is not that different. in terms of the actual growth rate of wages, they have been rising. i think you reset lower, and you gingerly are rising. tom: this is critical. this goes to the work of robert shiller in chicago and the rest of them. is there a change in corporate thinking that will suppress wage growth, or are you working in the model at credit suisse that we will gingerly get back to what you might have seen in a up?cled -- job openings go james: yeah, we think wages will go up if economic growth continues. i do not think the behavior

will change. the parameters are shifting. we have a lot more self-employed people, a big economy, all of that. talk demographics, productivity, the basic thing is that phenomenal growth rate of the economy is a little lower, so the ranges in which wages move is also a little bit lower, proportionately, but they have been going up, and they should continue to go up. when i would point out is if you look at overall labor income, which is really hours, growth plus jobs growth, that has been very steady at 4.5% for really the last seven or eight years. often when you see wage growth up, you see hours growth slow. it will rise when we see wage growth picking up, which is sort of a late cycle thing that we see, and we are not seeing it yet. tom: let's bring in guy johnson

in london. guy: james, when will they raise rates? come: i think it will be up the issue is you have these very big drops in core inflation in the spring, so they will not be out of the data in terms of those month on month change is we think the month on month changes in the coming months will be basically ordinary, and that will give us flight inflation in the near term. if you are forecasting inflation we see theer, calculations in the first half of the next year, which means you are forecasting it back to 1.8% by the middle of 2018. that is enough as long as the economy is growing, the labor market is fine, etc. it is a long way away, december. inflationmeet weak rates now. that is way premature. tom: gingerly we come back to james sweeney.

a conversation with william gross and the jobs report. jim glassman will join us. david gura and myself on bloomberg radio. same with us. ♪ -- stay with us. ♪

taylor: this is "bloomberg surveillance." i am taylor riggs. the estimates. according to people familiar with the matter, the vivendi chairman is considering an ipo for u.s. music as soon as next year. it was better than expected performance for euro manufacturing, one of the

fastest results 2011. that is your bloomberg business flash. tom: taylor riggs, thank you so much. it is generally a september for us to rip up the script. it is an extraordinary call to action by the senator of arizona. just celebrating his 81st birthday, john mccain writes a scathing op-ed about his president of the united states. purest just one part of what possibly could be my essay of the year. "congress must govern with a president who has no experience of public office, is often poorly informed and can be a polson in his speech and conduct -- we are not his subordinates. we answer to the american people." i argued foro say " a return to regular order, letting committees of jurisdiction do the principal work of crafting legislation and letting the full senate debate

and amend." by johnordinary essay mccain. -- toluse isrriba at the white house. has president trump lost senior republicans in the house and in the senate? this is bloomberg. olu john mccain has always been a maverick in the senate. he is trying to get republicans to speak out against the president. we have seen many not want to speak out against the president what he has gone astray, and john mccain is trying to what about this party in take a stand when the president makes the wrong move. tom: does he have the ear of senator mcconnell and speaker paul ryan? spoken out, have

senator mcconnell more than paul ryan, so it does seem that they are of one mind that the president is lacking information and inexperience. it just depends on what they are going to do about it. senator mccain is telling them they need to stand up to him a little bit more. , good morning from london. have they said anything - before about another president? toluse: we have not heard this language specifically from senator mccain. we have heard him the critical against both democratic and republican presidents in the past, but this is a new type of language where senator mccain is a saying that congress needs to in the place of a president who does not have the information and who is often impulsive and is not carrying out the duties of his office well. this does appear to be a new step and more-language than what we have seen in the past.

it will be interesting to see how president trump response. he is not want to buy his tongue. order.gging for regular what is the likelihood of getting back to john mccain's "regular order" with a rebate over tax reform? toluse: the white house has said they do want to have hearings, unlike with the health care bill, so they are planning to roll out a bill in the next few weeks, and we will see if they can return to regular order. we do not expect democrats to be really brought in as part of this process. it seems like it will be a republican-only process, but they will go through the process of having it will roll out into congress and having it bill, but you might not ask a lot of -- expect a lot of bipartisanship on the process. it looks like they will go with republicans only. luse olorunnipa,min

thank you come our white house correspondent. bring up this chart. you can steal this from me, james swinney, in your monday credit suisse report. in your mondayy, credit suisse report. it is the real atlantic is what i'm going to call it. over 14 years, this is the wage decline that america is screaming about. a you just said, we had little bit of a wage increase, but we are nowhere near this glory. james: this is a median measure, nowhere near the average measure. the increase in this one is significantly more than in average hourly earnings or employment cost index, but really they are telling you the same thing. it started to improve three years ago, two years ago. it is not that good. the level has shifted down. tom: james sweeney of credit suisse with us. coming up, we drive forward the

conversation, bill gross, mystery guest and will join us, and an important conversation with gary cohn. somehow, i think the essay of john mccain will come up in conversation. this is bloomberg. ♪

one of the great joys of james sweeney i credit suisse is a balanced approach. joining us now on the disasters of houston, he goes on to say

the "largest impact will be the energy infrastructure." where is the optimism coming from? is not optimism, that is just a fact about economic indicators. let's separate the human from the numbers. we will see initial claims, retail sales should be hit, and we have reduced our gdp forecast one percent, 50 basis points -- tom: for the nation? james: yes, for the next two quarters. you should see the indicators rebounding. gdp, a lovely rebound should be back in the first two quarters of next year. guy: james, you are looking at pictures of decimated highways underwater. when you tell me kind of numbers you think will be required to pick some of the stuff in your model, how toc

those models change when it comes to gdp growth, etc.? will: i do not think judy be able to count for the depreciation of physical capital you get from this kind of disaster, so later on when you are rebuilding, you are actually going to get a lot of growth back. but in the short term, these are major disruptions, and the economic data really do not tell you the whole story. guy: but this kind of net, do you, with a positive? toluse: no, we do not come out with a positive. ask for our number where the level of gdp will be from a year from now, basically the same up where we were before. , is asked to do too many things. we will have a worse capital stock because of the major damage. guy: i am sure gdp feels that

way about that title. a quick question -- are wages going to change as a result of this? james: wages? i don't think so. in the short term, we'll see initial claims in texas. a little further out, you will need a lot of cleanup workers, so that may drive wage growth in some sectors, but overall wage growth is much bigger in the national labor market. tom: we will come back with james sweeney of credit suisse, getting you ready for jobs data. the american red cross is asking for your help in texas. the organization already has dozens of shelters up and running, but it expects the crisis to grow exponentially. please contact redcross.org. ♪

it is washington, and it is a washington september. this will be extraordinary to processthe legislative

is explored and everyone returns, including our kevin cirilli. , reportedly,us within days, and we will talk to him about september in washington. right now, a quick moment with james sweeney, who is in the -- who at the lions library decided the gdp is not essential piece. i love that statement, "i do not care about gdp." james: i think it is a little weird from this one set of statistics we ask kids to tell us about living standards and efficiency and technology gains. i mean, there's a lot of conceptual ask on gdp that you cannot do, and something like this hurricane brings out. tom: if you do not measure gdp, how do we measure guy johnson's

happiness? james: i think we have to ask a scientist about that. i do not think economists is the right person. happy tot now, we are bring you our first word news in new york with taylor riggs. taylor: the u.s. has made its latest move in the schematic history test with russia. moscow has been given 40 hours to grow a consulate in san francisco in response to russia's ordering the u.s. to reduce the size of its diplomatic staff. is cuttingtration the obamacare advertising budget by 90%. the health and human services argues that promotional spending was ineffective. in kenya, supreme court has nullified the reelection of the president and ordered a new vote to be held within 60 days. judges ruled in favor of a petition by the opposition

candidate, who claimed the voting results were rigged in the president's favor. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i am taylor riggs. this is bloomberg. tom, guy? guy: thank you, taylor. angela merkel has backed emmanuel macron in pushing for euro integration, but when it comes to their plan, many find themselves in opposition. an election coming up this year, what role will italy play? thes join now enrico letta, former prime minister of literally. he joins us from the shores of lake como. good morning to you, enrico letta. thank you very much indeed for taking the time. is it a link track, isn't growing fast enough -- is it

growing fast enough, is italy back on track? enrico: i think the main point about the future of europe, we are now between the french elections in the german elections. we expect after the german elections the big initiative from france and germany to relaunch the european integration and replace some guidelines for the future. the main point of italy will be to stay there and stay with friends and germany in this relaunch. that is of course not easy, the economic situation is improving. the political stability may be the country in the next few years. guy: poverty has tripled, unemployment is still 11% in italy, the five-star movement is

polling around 30%. we have an election that is coming up. votdo you think the how do you think the votes tie into the political, five-star story? enrico: i think it is an angry approach of the voters against the leading class, the political class is still there. one of the main problems in the last month and this very period is the way in which the european union and the other countries left italy alone on migration issues and how to manage the migration crisis. for was another big push italian voters to lose trust in european institutions.

anis why they say there is italian point, but there is a very important pro-european point. the two roles are very m uch linked to the solution on this problem. guy: absolutely. investorsa lot of watching this program who have invested heavily into european asset this year. we have seen a huge flow back into european markets. it started around the french elections. what would you say to them about the political risks that will be emanating from italy as we go into the beginning of next year. what advice would you give them about the risks that they should be running, investing in to europe when, as you say, political stability in your country remains hard to get a hold of? enrico: the problem of the italian political stability has

to be considered in the frame of the european situation. europe was coming in 2016, in a it isorse situation than today come and that will be the situation of europe next year. i say that because there is a risk of political stability in italy, but last year and the first for this year, the risks for the european union was bigger and bigger with brexit, with trump, with marine le pen in a very strong position in france. today, the situation has changed, and the fact that france had a very important turning point, germany is defeating the populists and the antih-europe. of the launch of reintegration as there, so that

leads me to believe that maybe the problem in italy can be solved in the new and strong european situation. i am more optimistic today even with the fears of instability in my country. tom: mr. prime minister, good morning from new york. i am curious how you perceive italian big business -- maybe not from that up to milan in different -- maybe not romae, but up to milan. or is ita new tone, business as usual for big business in italy? enrico: today, in the last period, we had the feeling -- not only in italy but also in germany at other parts of europe -- that there is an industrial relaunch that is possible for the future.

twos linked, in my view, to very important points. and whyhe complete digitalization of the system. the second point is about dimensions. inare living in a period which in italy, france, germany, in europe, we are discussing about mergers, mergers and growing dimension. i think that is the key point because the future for european companies is linked to a global dimension. so the future will depend on the discussion on these points. we need to have a european permission not only with the aim and the mission to fragment and to block mergers but the opposite, to help mergers, to cross-countryrs,

mergers, to have european champions. the good signals until now are not enough. but these signals are good for the future. tom: very good. mr. enrico letta, former prime minister of italy, thank you. two different covers -- one of course on houston and harvey, and the other issue more european tone but on consumer goods worldwide, on the struggles, the strategies of unilever. stay with us this jobs day. this is bloomberg. ♪

taylor: this is "bloomberg

surveillance."i am taylor riggs. let's get to bloomberg's business flash to u.s. regulators are investigating the volkswagen emissions scandal and says it is already raised a red flag. 23 cases were already lost or erased. head of its omissions testing lab in california has been let go. airports are investigating problems with boeing's new tinker. tanker. a grid could damage specialist coatings used on fighters and bombings. the pimco income fund will $.50 per $100. according to morningstar, feared twice that

much. that is your bloomberg business flash. guy: thank you. less about who will be chancellor that with party will be called to govern the country. there are plenty of options here. speculation over possible outcomes include a combination isrank coalition, which merkel and schulz, which is what or thee at the moment, colors of the jamaican flag, the free democrats, and the green party. all of this is interesting. risks will soon emerge from the political story here in europe. matt miller spoke with the sep leader who gave his later on the possibility to make -- his opinion on the muslims to make a coalition. of theis opinion

possibility to make a coalition. >> it is likely. we ask for a maximum of conditions because they obviously do not have any momentum as president. on the contrary, losing support. a bigger questions like migration, the greens are stuck in 2015. guy: matt miller joins us now from berlin. what should international investors listen to these fourth, fifth parties? matt: for one thing, they could be vital to the new government. the cdu has only 39%, and any new government needs a 50%. if they do not choose a coalition party, they will have fdp, to green and the

and it will have to make demands from both of those parties, and those could be conflicting. guy: there is some talk that if up with 12% in october, they could end up taking over the german finance ministry. if that is the case, what would that mean for european policy? matt: if you look at the way angela merkel and wolfgang schaeuble are headed, they want a deeper union between the european countries. it looks like the way they are headed right now could end up with, for example, eurobonds. that is something the fdp is certainly against. that would be a red line they ar would not agree with. the fdp would only be forgiving

a haircut if they could throw them out of the eurozone. tom: matt miller, thank you. james sweeney with credit suisse will do us a solid on jobs day. carl riccadonna with tv . you can see the trading desk. that is a bowtie. i will pick that one out today. gasoline ind america, and you can feel that chart. stay with us. this is bloomberg. ♪

tom: you will be briefed at 8:30 a.m. on jobs day. guy johnson in london, tom keene in new york. let's start our pre-briefing now. let's go to the chart. the unemployment rate. long-term,rs, the structural, almost deleted go to the harbor

of 2008, much like what we saw, down here is 4%. nobody thought we would get there. we are getting there fast, and , a 3%ome outliers unemployment rate in three years. that is enough fodder for conversation. we can do that with james sweeney of credit suisse. you are not usually in until 8:00 a.m., carl riccadonna, but on jobs day, your brilliant bloomberg intelligence note, it is above the line of good and below the line of bad, and there's a lot of good right now. carl: break. various safety in numbers, and when the labor market is generating jobs broadly across the spectrum, and reflective of a healthy economy then when it is a few narrow categories. so early on, job creation has been a really concentrated, then

matures and enters its twilight phase, again, job creation begins to dwindle. not dwindling right now, so all of the forecasters out there saying we are 30 three quarters into the cycle, the recession cannot be too far off, are making a big mistake by using the calendar. underlying fundamentals, it tells us this is still a vigorous cycle. p.m.both of you know, 2:00 this afternoon, new york times, articles about bartenders, waitresses, and that. those jobs are there. how do we get better jobs in america? james: actually, as carljames: said, the composition of jobs has brought it out, and we are seeing better growth of jobs in america. ultimately come of those jobs tend to the field by younger people, and if you want the

population as a whole a lot of older people to be in those industries, it is about structural things like education. tom: wages and benefits, let me go to you, carl, first. is the wage game coming in cash wages, or are benefits are? are benefits a huge part? carl: benefits are still a huge part. tom: he said gingerly earlier. carl: ginger is a good description. tom: when you said 3% wage growth. carl: i agree. we might. if we can get gdp growing, yes, but i think if we are there, we will have payrolls more on the 125 area. carl: if we can rewind to where we were yesterday, we talked about the corporate profit recession coming to an end.

that will be a key driver of what we can achieve the 3% or better wage gains because businesses do not want to offer increases. that have ended. profits are real killer income of is re-accelerating, and the unemployment rate is lower. all of that is a positive backdrop for wage game. tom:-- wage gain. tom: guy johnson is in london. carl, the fed is itching to raise rates. if you look at it being real and a coming through, also those two factors for me. the more expensive associated with being a u.s. consumer, even if wages start to rise? carl: you will not give the inflation until you get some wage gains to support the more vigorous consumer spending, but i am going to halt you because i

refuse to make the assumption that the dots are real because i think the fed will significantly revise those dots. they are itching to get the balance sheet online started. their much more cautious but the additional rate increases. they would love to continue along that path. they do not want to see that if we look at a core inflation of 1.4%. guy: james comey if wages go up, up, dos, if wages go americans save or spend that money? james: it is not about wages, it is about income. if wages go up and payroll survey or 200, yes, you will see a boom. but as the cycle matures, you tend to see wages go up and hours swelling, so it is about income. but i will be watching today is the income number, foley were income, that has been growing at 4.5% for a long time. tom: before some i thought this

chart was at an office at credit suisse. with the interest rate market come up the expectation of what everybody was gaining, higher interest rate. we have been doing this forever, james sweeney. you have bill gross coming on at 8:30 a.m. is this the year you can tell bill gross he will finally get the price down? james: yeah, th ribbone chart. most economists are putting a fed hike. we think december, some people early next year. the market is later. the market is still saying wait a little bit longer. i actually think farther out in the curve. investors are not being compensated. i think global growth with inflation rising, you cannot see higher, longer-term interest rates. shorter-term will move up gingerly. tom: gingerly, and we go to carl riccadonna. is mr. cohn going to take a

victory lap on the white house lawn today? will he come out and say, "we made it!" carl: i think part of his job is to be an economic she later, so they will find some corner that looks good, whether it is the diffusion index. it could be an improvement in average hourly earnings. it will come from the payroll gain because august to come in. tom: i love gary cohn. stay with us, everybody. david gura. we have bloomberg radio with bill gross it on television as well. this is bloomberg. ♪

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nonfarm payrolls topping consensus that august results have miss for the past six years. a taxent trump considers increase in the debt limit, funding request for hurricane harvey. will mario draghi fill the euro store? subdued inflation and a strengthening euro underscores draghi's dilemma. a very warm welcome to you on this friday, september 1, by the way. when did that happen? i am alix steel. jonathan ferro and david westin are off today to about an hour and a half until the older did not our payroll reports. -- until the nonfarm payroll reports. the only big mover is oil, down by about 1%. other asset classes, we have seen a huge move in a pass on some of them, and one is the 10-year yield, down 12 basis points